Gillette (NYSE:G) took a break from legal sparring over razors to announce it's buying the Rembrandt line of tooth-whitening products today. Although tooth whitening has been a winning proposition with consumers, and could be poised for even more growth, Gillette's entering a very competitive area.
Most people think razors when they think Gillette -- and razors have put it in the courtroom with rival Energizer Holdings (NYSE:ENR). (Both Gillette and Energizer provide razors and batteries, making them kind of double archrivals.) However, Gillette also makes the Oral-B line of toothbrushes.
The Rembrandt acquisition gives Gillette a synergistic product for Oral-B, but it also signs the company up for some pretty steep competition. The leader in tooth-whitening products is Procter & Gamble (NYSE:PG) with its runaway success, Crest Whitestrips. In February, Procter & Gamble claimed it had 70% share in the tooth-whitening market, which it estimated to be about $400 million and expected to grow, especially when you consider today's emphasis on youth and beauty and an aging baby boomer population.
Meanwhile, Colgate-Palmolive (NYSE:CL) has been struggling to get a piece of the action with its Simply White products. In fact, in December, Colgate admitted in a conference call (courtesy of CCBN StreetEvents) that it lost some focus on the rest of its business in its zeal to push Simply White -- and that could add up to problems for the Rembrandt line of products.
Terms of Gillette's deal to buy Rembrandt were not revealed. Rembrandt's seller, Den-Mat Corp., is privately held, so there's not too much to glean about the Rembrandt business. However, even if Gillette is snapping up Rembrandt at a good price, it has its work cut out for it to make this one a big winner. Gillette may have spent and won to increase its share of the razor market, but it would also have to spend to win in the tooth-whitening space, given the other wildly popular choices on the market today.
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Alyce Lomax does not own shares of any companies mentioned.
